Standard Chartered Greater China Senior Economist Kelvin Lau and Hong Kong Trade Development Council Research Director Irina Fan in the GBA Business Confidence Index press conference hosted by Standard Chartered and HKTDC on April 17, 2023. (OSWALD CHAN / CHINA DAILY)

The GBA Business Confidence Index in the first quarter posted its biggest incremental increase since the index was launched, signifying growing business confidence in the Guangdong-Hong Kong-Macao Greater Bay Area since normal travel resumed between the Hong Kong Special Administrative Region and the Chinese mainland.

The GBAI’s performance index jumped 11.8 points to 51.3, while the expectation index rose 16.4 points to 61.5. Both are records since the launch of the index in the second quarter of 2020.

Improved consumption on the mainland is expected but respondents remain concerned about raising raw material costs, geopolitical tensions and intensifying competition within the industry

Complied by Standard Chartered and Hong Kong Trade Development Council, the GBAI surveys more than 1,000 companies from manufacturing and trading, retail and wholesale, financial services, professional services and innovation and technology in the Bay Area to gauge their views on business operations, the business environment and future expansion plans. 

READ MORE: Survey: Bay Area business sentiment rises for 5th straight quarter

Improved consumption on the mainland is expected but respondents remain concerned about raising raw material costs, geopolitical tensions and intensifying competition within the industry. The surveyed business firms hope that expanding domestic demand, new GBA-specific policies, more attractions for foreign investments, as well as support for the private sector, will further improve the business operating environment in the city-cluster area.

Kelvin Lau, Greater China senior economist at Standard Chartered, said that the GBAI performance for the second quarter may not register as strong an overall rebound as it did in the first quarter.

“First, the pace of global uneven economic recovery will levy varied impacts on the manufacturing and trading sector in the Greater Bay Area,” Lau cautioned.

READ MORE: Survey: HK SMEs' business confidence remains stable

 “Moreover, we still have to gauge the long-term impact of the Silicon Valley Bank incident on the financing capabilities of the innovation and technology firms. We also predict performance in global chip exports will be weak compared to other technology component exports,” he added.

Lau said he believes the manufacturing and trading, import and export, and technology and innovation sectors may exhibit varied business performance in the second quarter.

HKTDC Research Director Irina Fan said, “Hong Kong enterprises are already diversifying their markets that can withstand a slowdown in the American and European markets.”